1997 All Over Again

Déjà Vu: Whether It's 1997 or 2007, the Big Airlines’ Playbook of Blame and Deception Stays the Same

The Air Transport Association and the Airlines Are Sticking with the Same Losing Strategy from 1997: Blame Others to Try to Justify a Huge Handout from Congress

The big airline executives and their lobbying organization, the Air Transport Association, have spent the last several months engaging in a campaign of mistruths and deception to sell Congress on a risky new user fee scheme that would shift their tax burden onto small aircraft. However, it turns out the big airlines are using same tired tactics they used in 1997, when they tried to push their tax burden onto other aviation segments.

In 1997, the commercial airlines, and specifically the “big seven” airlines, tried to overhaul the ticket tax structure in favor of a user fee scheme that would shift their tax burden onto passengers that use low cost carriers. Their strategy: blame the low‐cost carriers for not paying their fair share. Now, ten years later, the airlines are regurgitating the same old, tired claims to try to justify shifting their tax burden onto their latest target, general aviation.

On Shifting Their Tax Burden Through User Fees

• 1997: “The upshot of the Group of Seven [user fees] proposal is to shift some $600 million in costs away from the big carriers to the smaller carriers.” Congressman James Oberstar (D‐MN).
[i]

• 2006: "The nation's airline industry is lobbying to cut as much as $2 billion in taxes from its annual tab, shifting those costs to smaller business aviation users and other aircraft." [ii] Playbook 1997 Playbook 2007

On Scapegoating Other Aviation User Groups

• 1997: “We've carried them [low‐cost carriers] for several decades now.” Tim Doke, spokesman for American Airlines.[iii]

• 2007: “Unfortunately, what we have today is a… lopsided funding system where one group of
users… subsidizes another user group – corporate jets.” James May, Air Transport Association.
[iv]

Even Though They Continue to Admit that They Plan to Pass on No Savings to the Consumer

• On the tax cut they received in 1997: ""The fares that travelers pay won't change, but the
amount that normally goes to the excise tax will instead be captured by the airline.” David
Messing, spokesman for Continental Airlines. [v]

• One airline executive recently on pocketing their expected tax break: “At the very least,
[if a tax cut was awarded] we could keep fares the same and make more money.” Fort Worth Star‐Telegram. [vi]

The Truth

• Airlines Continue to Spread Mistruths: The ATA is clearly spreading mistruths to try to justify their tax cut proposal. Even though they claim they pay for 94% of the taxes going into the air traffic control system, FAA’s own documents show that all U.S. passenger airlines combined only pay 77% of taxes.

• Big Airlines Drive the Majority of the Costs of the Air Traffic Control System: The airlines would have you believe a small 4 seat plane landing at a rural airport in Kansas drives as much of thecost to the air traffic control system as a jumbo jet landing at a major metropolitan hub airport. This fallacy has been universally rejected by the International Civil Aviation Organization, the international aviation community, and many nations that have imposed user fees to finance their air traffic control system.

• The Airlines’ Latest User Fee Scheme is Nothing More than an Attempt to Get Another Handout: The airlines latest “user fee” scheme is nothing more than another thinly veiled attempt at yet another government handout. The facts clearly show that this proposal would do nothing to help modernization, would result in a huge new bureaucracy, and shift control of the air traffic control system away from Congress and into the hands of the commercial airlines. On top of that, the airlines would net out with another billion dollar handout at the direct expense of small businesses and communities.

• Another 11th Hour Scheme from the Big Airlines: Like they did when they introduced a brand new tax structure after aviation taxes had already expired in 1997, the airlines have now come out with yet another last minute tax cut scheme ‐ with less than 30 legislative days left before funding for FAA expires. This latest “proposal” would award the airlines a tax break on their most lucrative routes by exempting the first 250 miles of any flight from taxes. In fact, 25% of the top 12 busiest routes in the country would be tax exempt under the airlines’ proposal, creating a significant loss of revenue for air traffic modernization.